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Friday, November 17 2017 @ 03:31 PM AST

The Bahamas gives the most mature response to Moody's in a long while

It could just be rhetoric to quiet down the New York-based credit rating agency but if the Government of The Bahamas does as it says and takes action to prevent a downgrade, this could be the most mature response to Moody's Investors Service in the Caribbean ever.

What many politicians in Barbados and Trinidad and Tobago do not understand is that Moody's Investors Service is just what it says it is: a service investors subscribe to.

Their primary clients are the hundreds of bondholders in other country's soverign debt and they (Moody's) get paid to look out for them.

So they flag the actions they think are wrong and rate accordingly. None of it is personal or political. Moody's cares little whether the local politicians immature reaction is to announce that they're going to hire a third credit rating agency to get a third opinion.

They care little if politicians lie on them and say they wanted the Government to cut public servants' salaries or lay off workers or devalue the dollar. They care little which party in our islands loses or retains power, so saying "nobody voted for Moody's" only underscores that politics rather than economics guide the economic management of the country. Their job is to tell the truth and give an honest opinion to investors, and they will likely continue to do that.

If The Bahamas does as it says it would and brings its fiscal position in order, now rated on the same level as Trinidad and Tobago (first tier of 'junk' status), The Bahamas could end up higher rated than T&T.

The following is the response of the Government of The Bahamas:

Bahamas Information Services
Date: July 12, 2017
The Ministry of Finance takes note of the statement by Moody’s with respect to placing The Bahamas on review for a downgrade. This action, in itself, was not unexpected, given the undesirable state of the fiscal situation, as detailed in the Government’s 2017/18 Budget Communication.

This administration, however, is moving expeditiously to address the fiscal situation which has given rise to this credit rating review exercise and possible downgrade.

These steps include the planned introduction of Fiscal Responsibility legislation, new procurement regulations and a comprehensive public expenditure review, with the objective of achieving savings and ensuring consistency with the Government’s policy priorities.

The risk posed to the nation’s fiscal position by the threat of weather-related events is also under review. Work on all of these areas has commenced, and the results are expected before the end of this fiscal year.

In supporting initiatives, the Government’s efforts to strengthen revenue administration are receiving renewed focus, especially in the areas of real property taxes, customs, VAT and Business License administration and enforcement.

Their effectiveness will be reinforced by the Government’s plan to introduce a Revenue Administration Bill, to enhance the mechanisms available for dealing with tax delinquencies.

In addition to addressing the fiscal challenges we face, this administration will tackle the challenges to economic growth that confront us by moving quickly to improve the ease of doing business in The Bahamas, addressing structural impediments to growth and attracting foreign direct investment that has a demonstrably positive impact on the local economy.

While this review is an unfortunate development, it serves to underscore the imperative of taking decisive and timely measures to secure the fiscal health of The Bahamas and by extension, the future welfare of all Bahamians.

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